5 Fantastic Things About Franchising

franchising factsThe business model of franchising is phenomenal. Although franchise ownership is not for everyone, for those that align their skill sets with the right franchise offering, being a franchise owner usually beats working for someone else. Here are five things that make franchising fantastic.

1. Proven Model

When you purchase a franchise, the thing that you are really purchasing is a business model. You are purchasing the rights to use someone else’s idea. This someone (the franchisor) has put their idea into an organized, easy to follow operations manual. In other words, you are replicating the franchisor’s business. The obvious advantage is that you don’t have to “invent” anything of your own to start a business. It’s already been invented.

2.  Formal Training

Once you have written a check for the Franchise Fee, and signed the franchise agreement, you are officially a franchisee. It is now on the franchisor to teach you their system, in a formal fashion. Training can last from three days all the way up to two weeks. It depends on how complex the franchise concept is.

You’ll be trained on the use of their computers and software, their operational procedures, marketing and advertising, human resources, and sales. Some franchisors even have online training modules set up, so that you actually can start training from home, a few weeks before you head to their corporate headquarters.

3.  Marketing systems

Marketing techniques employed by franchisors, are usually top notch. That is because part of the franchise development process includes testing. Some franchise offerings end up using direct mail marketing to get customers, while some may find that radio advertising proves to be the most effective way to find and retain customers.

The point is this: You are not the one who has to try out nine or ten different marketing ideas in order to find the one that works the best.  It has been done for you already. In most cases, the franchisor knows what works. They just have to show you how to implement it.

4.  Technology

The franchisor needs to have great technology. Twice. First of all, the franchisor must make things as efficient as possible for it’s franchisees, so they can concentrate on business growth and development, not payroll, and scheduling. Most franchisors have software programs of their own for their franchisees, who pay for them as part of their initial investment.

The franchisor must also have top notch software for their own internal operations. Things like franchisee sales figures, royalty payments, email marketing metrics and website statistics are all measured, so that management can stay on top of things, and keep the system growing.

5. The Franchisee Network

This may be the best part of the franchise business model. As you learn more and more about the franchise offering that you are interested in, you will find that the franchise director or salesperson can only go so far in dispensing pertinent information about the franchise opportunity. It will be time for you to reach out and talk to the network of franchise owners who are in the business that you may want to get into yourself.

You should call 10-15 franchisees of the franchise concept you are interested in. You will be able to get a lot of your questions answered, but it gets better. Undoubtedly, you will find some commonality with a couple of them. These are the franchisees that have given you permission to call them back if you happen to have more questions before you make your decision. Hold on to these names and numbers. These will be the folks you call after you become a franchisee. You could be calling them to get some much needed advice during those challenging start-up months.

These people will usually go out of their way to help you. They probably had similar help during their own start-up phase, and are more than willing to give it back. Sometimes, close friendships even emerge. After all, they probably went into a business of their own for some of the same reasons that you are thinking of doing so. Talk about a natural bond.

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Joel Libava on 2008 franchise trends About the Author: Joel Libava is President and Life Changer of Franchise Selection Specialists. He blogs at The Franchise King Blog.

20 Comments ▼

Joel Libava - Franchise Expert


Joel Libava Joel Libava is the Franchise Expert for Small Business Trends. Joel, The Franchise King®, equips today’s prospective franchise owners with time-tested, proven techniques designed to increase odds of success. He does this through one-on-one coaching, and gobs of useful content that can be found on places like Small Business Trends, SBA.Gov, and his award-winning franchise blog, The Franchise King Blog . He’s been featured in Entrepreneur® magazine, and is frequently called upon by national media outlets and publications for his no-spin insights into the world of franchising.

20 Reactions

  1. TJ McCue

    As I’ve mentioned to you in other comments, Joel, every so often I think about buying a franchise versus running my own solo practice. And your post has me thinking more seriously!
    Thanks.

  2. Here in Australia, with the recession, we are seeing many franchises go under – blaming it on ‘growing to fast’. Are you havng the same problem in the states?

  3. This is one of my dreams Joel. When I was young as in I was in high school, I wished to have my own McDonalds too. It was then in College that I learned that it is called franchising.

  4. Joel Libava

    Fantastic comments, folks…

    TJ- Whenever you are ready…

    Heather, Super fast growth is usually a problem with young franchisors. Slow and steady is the best way to grow a franchise organization, although the potential $$ from multiple Franchise Fees are tempting for some young franchisors to ignore.

    Mary Grace-To this day, McD’s is the Rolls Royce of franchising. The best of the best.

    The Franchise King
    Joel Libava

  5. You really do have a good way of making franchising appealing. In your other posts you’ve touched on some of the negatives so it’s nice to see what positives franchising has to offer. Even though lots of time and effort go into franchising, the benefits exist too.

  6. Martin Lindeskog

    Joel,

    What are the differences and similarities if you license a business idea to other parties and when you establish a franchise?

    Which type of franchise has the biggest growth at the moment? Could you find franchise opportunities that have a direct selling / network marketing part built into the business?

  7. Another very perceptive article on franchising, Joel. I know you just said “five things” and not “THE five things” but I would add ongoing management support as a benefit. While the formal training and the franchisee network are part of that support function, too, a good franchisor helps the franchisee overcome the hurdles that independent small businesses are forced to deal with on their own.

  8. Joel Libava

    Business Attorney,
    You are right! Thank you…

    Martin, a license is what you are buying as a franchisee, but their ARE some legal differences. Maybe “Business Attorney” can go more in depth about those.

    A franchise attorney did tell me once that folks that want to “license” their offerings have to be very careful that they are really NOT offering a franchise. This is best left for the lawyers, Martin.

    Growth? That “could” be found in a future post.

    The Franchise King
    Joel Libava

  9. Andy Birol

    As a former marketing manager of a very large and successful franchise, VoiceTel, I think there is another side to franchising that would balance Joe’s exuberance. Going point by point:

    1. Most franchise models aren’t proven and run out of gas or are too undercapitalized or commoditized to get needed traction. Be very careful the dream you are being sold is a realistic business.

    2. Most franshises put their money into selling more franchises than supporting and trainng their existing franchisees. Talk to the successful and failing franchisees before you take the plunge.

    3. Marketing is the great downfall of a franchise that starts to flounder. It is expensive and franchisors start to butt heads with their franchisees over this. Ensure that the marketing plan is funded and the franchisees agree it makes sense.

    4. Technology is critical and the successful franchisor will have coninually invested in this.

    5. The franchise network and system is everthing! Good frnachise system are characterized by shared power between the franchisees and the franchisor. MacDonalds doesn’t make an advertising decision not affirmed by their franchisee leaders.

    The most fundamental question to ask is, why not run a business without joining a franchise. If you can survive the first couple years you will be better off going it alone. Check out http://www.andybirol.com for ideas on how to decide and build your owne business.

  10. Joel Libava

    Hi Andy,
    Although this is a pro-franchise model article, I am a very balanced franchise industry writer, and if you look at past articles here and on The Franchise King Blog, I think you will see what I mean.

    Sounds like you may have had a negative experience as a franchisee, but looking at the work you do, it may be that you were never really a fit for franchising as a business model. You run your own show as a consultant, much like me. I would make a lousy franchisee, because I am way too bull-headed, and entrepreneurial.

    You said “Most franchises put their money into selling more franchises than supporting and training their existing franchisees. Talk to the successful and failing franchisees before you take the plunge.”
    Do you data to support that claim?

    You also wrote that “The franchise network and system is everything! Good franchise system are characterized by shared power between the franchisees and the franchisor. McDonalds doesn’t make an advertising decision not affirmed by their franchisee leaders.

    McD’s is THE Rolls Royce of franchising. Most franchisors don’t have active franchisee advisory councils at the level McD’s does. This franchise is so big that they have more than one council. By the way, the franchisor has the power. It is supposed to.

    Thank you for reading and commenting on my article.

    The Franchise King
    Joel Libava

  11. great info. i have written a few guides to franchising myself. a lot of the problems stem from people making uninformed decisions….have you been following the burger king case?

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